Telecoms giant will help O2 launch a 4G mobile internet service for millions of UK mobile customers.
BT has agreed to support the launch of 4G mobile internet for O2 customers.
As part of a 10-year deal between BT and Spanish firm Telefonica, which owns O2, the British telecoms giant will build a high-capacity 4G framework that enables O2 to follow EE in providing the 'next generation' of mobile broadband.
Adrian Di Meo, chief technology officer at O2, said: "With the UK's 4G spectrum auction complete, UK mobile data traffic is set to grow by more than 400% by 2016. This is a huge opportunity for us, as well as a technical challenge.
"Through our partnership with BT, customers of O2 will be backed by a high-performance mobile internet network that we believe will release the potential of 4G services and result in unrivalled mobile phone and internet browsing experiences."
Chet Patel, managing director of BT Wholesale, said: "Our network solution will help O2 to deliver a next-generation mobile experience to its customers to fully exploit the exciting possibilities of 4G technologies. We're moving quickly to get O2 up and running."
We predicted last week that BT would partner with O2, which it owned until 2001 - back then it was known as Cellnet - before it was bought by Telefonica.
At the moment, EE is the UK's only major provider offering 4G mobile broadband, but rivals including O2, Vodafone and Three are expected to follow suit this summer.
There's also a chance BT will launch a 'superfast' service of its own, after it spent almost £200million on the radio spectrum needed to provide 4G, which delivers speeds at least five times faster than the 3G still connecting the vast majority of Britain's mobile users.
Meanwhile, EE has announced plans to increase the capacity of its 4G network, taking top speeds to 80Mb and doubling the average speed customers receive to at least 20Mb.